Personal Finance
Fed up with poor service, consumers are switching energy providers in their millions. Now, as fuel prices fall, they want cheaper bills. It’s...
CRIES that energy giants are profiteering while wholesale prices plunge and customer complaints soar are finally forcing suppliers to start reforming their service. Heavy criticism has yielded some early, fragile results, starting with the promise that switching supplier will soon be much faster.
The Mail on Sunday looks at the latest energy headlines and what they mean for bill-payers at home.
WHY ARE SUPPLIERS UNDER PRESSURE?
COSTS borne by the suppliers of gas and electricity to the 26 million homes in the UK have fallen.
Wholesale gas prices have dropped by 28 per cent in the past year and the price of a barrel of oil has halved in the past six months.
When the reverse happens, and costs go up, suppliers are typically quick to increase prices. But the Government and consumer groups say companies are not translating cost savings into household bill reductions quickly enough.
New figures from official mediator the Energy Ombudsman also show that the volume of complaints it received from unhappy customers nearly tripled during 2014 to more than 52,000.
The energy market is under investigation by the Competition and Markets Authority, which is closely scrutinising the relationship between rising bills, profits and concerns over ‘service quality’.
WHAT’S NEW?
GOVERNMENT-backed trade body Energy UK has announced that the time it takes to switch from one supplier to another will be halved – from as long as five weeks to 17 days. This gives energy companies three days to transfer customers, but maintains the usual 14-day legal ‘cooling off-period’ allowing customers to change their minds without penalty.
Many leading suppliers already offer the shorter switching times, but the rest will do so in the next few weeks.
New figures show that 3.1million people changed their electricity provider in 2014 and 1.1million of them moved from a big supplier to a smaller one.
In response to criticism about the gap between wholesale prices and residential bills, energy giant E.On has become the first of the ‘Big Six’ suppliers to reduce gas prices for customers on a standard tariff – though some experts say these cuts don’t go far enough. The rest of the ‘Big Six’ are British Gas, EDF, SSE, npower and ScottishPower.
Gas bills for E.On’s variable rate customers will fall by an average of 3.5 per cent over a year – or £24 for the average household.
However, an average customer could chop more than £200 off annual bills by moving to its new, cheaper, fixed-rate tariff.
Energy UK says suppliers have delivered price cuts this way – by offering cheaper deals to people who switch from standard tariffs.
WHICH COMPANIES ARE IN THE DOGHOUSE?
SCOTTISHPOWER and npower – goliaths in the market with a combined UK customer base of more than eight million – have been dogged by problems.
Npower was threatened with a ban on sales calls by regulator Ofgem last year because of catastrophic billing failures, but the company met its targets for reducing complaints and late bills, sidestepping the penalty.
This threat is now being directed at ScottishPower as it seeks to fix its own billing blunders and to remedy 400 customer complaints handed to it by The Mail on Sunday alone.
Difficulties were triggered after both companies introduced new computer systems. And the hangover is lingering. Hundreds of thousands of customers complained to npower and ScottishPower last month and tens of thousands are still waiting for overdue bills.
Ofgem says that it will continue to monitor ScottishPower’s performance and if the targets it has been set are missed it will stop the company recruiting new customers.
The regulator said it was ‘disappointed’ by a rise in the number of late bills recorded by npower last month and will continue its investigation into npower’s problems.
HOW CAN I CUT MY BILLS?
SWITCH to a new tariff. Recent best-buys were launched by E.On, First Utility and Extra Energy. For guidance visit Ofgem’s independent website Go Energy Shopping.
If you’re confident with technology, a new app called Voltz promises to help you switch to a cheaper tariff in minutes with a few taps of your smartphone. The service is the brainchild of broadband and TV switching company Simplify Digital. The free app is available on iPhones from tomorrow and on other smartphones from the end of February.
It won’t make money from commission paid by suppliers, as is the case with comparison websites. Instead, the app’s technology will be licensed and sold to other businesses.
Comparison websites, such as u Switch and The Energy Shop, can also help you switch. However, if a website asks whether you want to see only deals you can switch to today, select ‘no’. If you select ‘yes’, it will detail only the suppliers with whom the website has a commercial deal.
Or sign up to a collective switching firm such as The Big Deal – which uses the power of a large customer base to bargain with suppliers for cheaper bills. Visit website this is the bigdeal or call 020 3463 0820.
Referring to a recent energy bill – or annual statement – will make comparisons more accurate, as it gives you an idea of how much energy you use a year.
SEARCH for extra help. Turn2us – a charity that directs people to financial help – last week launched a ‘Cut out the Cold’ campaign, urging people to use its free online tools, showing if they are eligible for state or charitable support.
Its research indicated seven out of ten families have never heard of the Warm Home Discount, which can cut £140 off electricity bills for people on low incomes. Visit website turn2us.org.uk or call the helpline on 0808 802 2000.
Anyone struggling with bills can also call the Home Heat Helpline run by Energy UK on 0800 336699.
COMPLAIN about serious billing problems. If you are unfairly penalised because of poor service, lodge a complaint with your supplier first and give it eight weeks to put things right. If it doesn’t, complain to the Energy Ombudsman. Visit its website ombudsman-services.org/ energy or call 0330 4401624.